Blockbuster (BBI) Gets Smart, Drops Crazy Circuit City (CC) Bid

Blockbuster (BBI) has finally come to the same
realization
most of the world had in April: There's
no good reason for it to buy Circuit City (CC), another
foundering retailer. So it's ditching those efforts, "spooked by
souring market conditions" and whatever it found in Circuit
City's books, the
WSJ reports ($).

The video-rental chain's move to withdraw its bid leaves Circuit
City scrambling to ensure its future. Circuit City had
reluctantly agreed to allow Blockbuster and others access to its
books after big stockholders pushed for the move. The company
could now continue to seek a buyer, or raise new financing to
permit it to go it alone. ...

Circuit City played down Blockbuster's move by saying its board
continues to evaluate all options, including a sale. In a
statement, it said the review "is an active and an ongoing
process." ...

Circuit City's hiring of Goldman Sachs Group to guide a
review "was not dependent on Blockbuster's participation,"
Circuit City Chief Executive Officer Phillip J. Schoonover said
in a statement Tuesday.

While the deal was
popular with Carl Icahn, Blockbuster's biggest shareholder,
it never caught on with Circuit City shareholders; CC traded
below the offer price of $6-8 per share the whole time. Shares
closed Tuesday at $2.55.